Hundreds of thousands of Texas students will soon feel the pinch of higher college loan rates

Because of congressional inaction, accompanied by an unusually large dose of fingerpointing, interest rates on federally subsidized student loans rose Monday, leaving thousands of loan-seeking Texas undergrads staring in the face of a 6.8 percent rate increase.

The increase will only apply to those who choose to take out new loans for future semesters. Loans negotiated before the July 1 deadline will remain at the 3.4 percent interest rate. However, students who are just beginning their undergraduate programs or require more funding will face the spike.

According to Pauline Abernathy, vice president of the Institute for College Access & Success, 464,000 Texas students rely on subsidized loans.

“With the subsidized loan rate, it’s only undergrads who are eligible,” said Abernathy. “Freshmen will be the most affected because the students who are seniors may only have to borrow for one last year as opposed to 4 or more years.”

With the new rates in place, schools across Texas have started to make extra efforts to cut costs for students in a variety of ways.

Executive Director of Scholarships & Financial Aid at Texas A&M University Delisa Falks said that approximately 48 percent of the undergraduate body relies on subsidized loans already. Faculty and staff are working on updating the A&M Facebook and Twitter pages to keep students in the loop regarding what they are doing to help cut costs.

Tom Melecki, the director of the Office of Student Financial Services at the University of Texas at Austin, said UT is doing everything in its power to keep costs down for students.

According to Melecki, during the 2012-13 academic year, there were 13,393 UT Austin undergraduates who borrowed Federal Direct Subsidized Loans at 3.4%, which makes up about one-third of the entire undergraduate body. Collectively, those students racked up $55,370,853 in subsidized loans in the last year. Since the 2008-09 school year, Texas residents attending UT Austin full-time have seen a $1,282 increase in tuition.

In response, those at the university have been doing everything in their power to keep tuition costs low in order to combat the rising interest rates.

“We at the university find the interest rate increase that went into effect today frustrating because it makes higher education more expensive for our financially needy students,” he said. “For years — even as UT Austin’s state appropriations were reduced — we have been doing everything possible to hold down tuition increases.”

While the interest rates on current loans will remain unaffected, millions of students across the country taking out new loans will feel the increase of the rates right where it hurts: their wallets.

“Absent some future amendment to reverse it, Congress allowed an interest rate change to go into effect today that will cost our financially needy students over twice the amount that tuition has risen in 5 years,” Melecki said.

In Washington, it was business as usual. Republicans blamed Democrats, who blamed Republicans. The House blamed the Senate, which blamed the House.

Sharing the frustration over the increase, several Texas lawmakers also expressed their disapproval toward Congress’ decision to adjourn for the holiday without solving the loan situation. Happy Fourth of July, Texas students!